Government Publicity,social Trust,and The Economic Decision Of Corporate Manager And Investor

Under the background of the new journey of China’s socialist modernization drive,the new normal of economic development,the new stage of government function transformation and the period of economic transformation,as well as the rapid development of Internet technology and new media technology,coupled with significant changes in the way of the information dissemination and evolution of public opinion,the masses have higher requirements and needs for government information dissemination and publicity,but also government publicity work has a more profound goal and role.On this basis,the research perspective of government publicity should not be limited to the social and political dimensions from previous studies,but should be extended to the economic field.As a "soft behavior" and "soft system" of the government,can the government information campaign have external economic impacts on the development of capital markets and corporate governance in addition to its social and political effect? Compared with the one-size-fits-all "hard regulation",as a "soft system",can government publicity properly take the economic advantages of informal institutions and more effectively coordinate the relationship between the government,the market,and corporates,building a new pattern of economic development and social governance? In fact,these are the research objectives and focus of the paper’s topic.Specifically,the paper explores the substantial role of government publicity in developing the socialist economy in terms of the microeconomy field.And it analyzes whether the "soft institutions" such as government publicity could better shape a social environment suitable for the development of the market and corporates.Meanwhile,based on the social effect of government publicity,the paper discusses how government publicity can play the following function through the economic advantages of informal institutions.That is,coordinating the relationship between government behavior and market development and enterprise vitality,strengthening the economic interaction between policy institutions and informal institutions,and enhancing the optimization and adjustment of economic behavior and economic decision of market investors and firm managers.Based on the new media technology,for achieving the goals and influence of government publicity work in various aspects,such as society,politics,people’s livelihood,culture,and civilization,promoting the implementation of the "Internet+ government" strategy and exploring the new pattern of social governance,the government social media dominated by government microblogs came into being.On the basis,the government microblogs got strong support from the State Council and national policies,as well as actively building from various departments and governments at all levels,and have become an important way in the new era to widely and deeply publicize,promote,and disseminate government information.Therefore,employing the staggered establishment of local government microblogs across China as the event shock of enhancing the local government publicity,from the perspective of market investors and firm managers,the paper investigates the effect of government publicity on the local capital market and corporate governance of local firms.Further,the additional analysis examines how the above impact affects the economic consequences of local firms,even expands to explore the possible changes in the local economy.Previous research documents that,objectively,government publicity could increase the participation of citizens in social life and political life,improve the social connection and enhance the citizen-government relationship.Meanwhile,government publicity helpfully shapes social beliefs and improves citizens’ assessments of government management and social governance,as well as increases the knowledge and identification of citizens for local society and government.And it is then improving local social trust and boosting citizen trust level.In the real setting of China,government microblogs effectively spread the voice of the government,transmit social positive energy,closely connect and unite the masses,shape common values and social beliefs,and continuously improve people’s sense of happiness,security,satisfaction,and belonging.Following this note,the rising local social trust resulting from the startup of local government microblogs is expected to substantially influence the local capital market and governance of local firms.Theoretically,existing literature taking the stance of market investors has documented that an increase in local trust level means stronger confidence held by investors in the local capital market.This not only indicates higher prospect estimates and lower risk expectations for local firms’ development,but also higher trust and interest towards information disclosure of local firms.Thus,it would result in a higher market valuation and better recognition for earnings announcements released by local firms.For the firm managers’ channel,relevant studies generally hold twodimensional perspectives: the passive and active views.The passive theory suggests that stricter social norms arising from improved social trust pose more significant restrictions to local firm managers,inhibiting the implementation of myopic and opportunistic decisions,and steering managers towards more altruistic,forward-looking,and long-term decisions.At the same time,a higher trust level also rewards managers with broader decision-making maneuverability and higher failure tolerance.On the other hand,the active viewpoints out that a higher trust level is conducive to fostering altruism and moral integrity among people in the local region.Meanwhile,the high trust level will encourage local firm managers to pursue long-term cooperation,reciprocity,and win-win results.Moreover,the high trust level also will boost managers’ faith in firms’ long-term development and alleviate their worries about future risks.Thus,this paper finds that as below.Firstly,based on the statistical analysis for local government microblogs’ operating and textual features,I validate the decentralized distribution of time and space of local government microblogs’ establishment and the high frequency of publicity and promotion of local government microblogs.I also find that the textual amount of local government microblog is large,and the tone of that is dominated by positive sentiment,the content of that focus on local livelihood,social and political issues.On this basis,local citizens actively pay attention to and participate in the operating of local government microblogs.And the preliminary analysis of the research setting suggests that local social trust significantly improves after the establishment of local government microblogs based on many dimensional measures of social trust.Meanwhile,the survival analysis of the timing of local government microblogs’ establishment shows that the event shock of local government microblogs’ establishment is not obviously related to local economic conditions.Secondly,to explore the effect of government publicity on the local capital market in terms of the market investors.The paper finds that due to the enhancing trust level after the local government publicity increases,the heckling and criticism behavior of investors to local firms reduces,and the valuation and earnings response coefficient of investors for earnings announcements of local firms improve.Then,a series of validation tests confirm the increasing trust level of local investors.And the channel tests using the publicity characteristic of local government microblogs suggest that the effect of government publicity on the market behavior of local investors is more pronounced when post quality,post sentiment,and engagement degree of local citizens are higher.Moreover,the heterogeneity analysis based on the social environment and education level shows that government publicity would have a more intense impact on the local capital market,given that the social environment is more open and inclusive and the education level is lower.Thirdly,the paper investigates the role of government publicity on the corporate governance of local firms from the channel of firm managers.It finds that the government publicity campaign,brought by the establishment of local government microblogs,would affect the decision-making of local firms’ managers by improving the local social trust,which strengthens local firms’ governance.Specifically,local government publicity prompts firm managers to prefer long-run and high-value economic decisions,effectively enhancing managers’ innovation decision-making and social responsibility taking decisionmaking.And I conduct a series of analyses,validating the firm manager channel of this paper.Meanwhile,the mechanism tests show that,when the publicity effectiveness of local government microblogs is strengthened through increasing post quality and positive tone,the effect of the government publicity on managers’ decision-making of local firms is more intense.Further,after exploring the heterogeneity effect of institution environment and education level,this paper finds that the impact of government publicity on local firms is more pronounced in the region with a weaker law and education foundation.Finally,the paper construct additional analyses from the microeconomic and macroeconomic fields.Based on the effect of local government publicity on the local capital market and local corporate governance,this paper further takes insights into how the above influence changes the economic consequences of local firms.Finding that the firm value of local firms increases,the firm risk of local firms reduces,the stock price informativeness improves,and the audit fee marginally drops.Subsequently,I try to perform even further extended analyses to test whether government publicity could affect the local macroeconomy,through exploratively and experimentally expanding the microeconomic effect of local government publicity to the macroeconomic level.The results find that local economic development and innovation levels significantly increase.Meanwhile,weak evidence suggests local financial development seems to improve.Overall,government publicity changes the economic decision and behavior of firm managers and market investors in the local area via improving the local trust level.The above results reveal the optimization of corporate governance of local firms and the enhancement of the local capital market reaction,which means the improvement of capital market efficiency and listed firm quality.Additionally,government publicity changes the economic consequences of local firms,even further affects the local economy.In the theoretical contribution,the paper grows the literature on the government publicity campaign and the government and media by exploring the external economic effect of governmental media’s publicity activities.Therefore,it fills the research gap without previous studies.Meanwhile,this paper directly relates to the research field of the relationship between government behavior and corporate and market.Specifically,the paper provides academic support for understanding the impact of active government behavior on firms and capital market under the background of the socialist economic system with Chinese characteristics,via studying how the governmental "soft behavior" such as government publicity influences the capital market and corporate governance.Moreover,my paper contributes to the literature on the economic effect of the informal institution exemplified by social trust,improving the research which explores the role of trust in the capital market and corporate governance.Finally,this paper also directly supplements the studies in accounting and finance that pay attention to social media’s influence by highlighting the effect of local government use of social media.On the implication for reality,the paper innovatively evaluates the economic effect of policies of government social media publicity,providing helpful support for the government to stimulate enterprise vitality and enhance market effectiveness through designing the institutions and procedures.And the paper inspires the government should consider the external economic impact when making similar policies.Meanwhile,this paper suggests that government should effectively employ the economic advantages of the informal institutions to enhance economic efficiency,supplement the weakness of formal institutions,and improve the socialist market economic system.In addition,the results of my paper imply that government agencies would be good at coordinating the role of "soft system" and "hard regulation".And those results also point out that the building of well social environment could contribute to effectively playing the economic influence of informal inst itutions and the government "soft system".Finally,the paper directly provides suggestions for growing governmental social media and improving the "Internet + government" strategy,and also gives the real cases for the innovative pattern of nation building and social governance.